TED Magazine - February 2017

72 the ELEC TRICAL DIS TRIBUTOR • Feb. 17 www.tEDmag.com
start and stop multiple times per day. Then there is possible oversupply, technically manageable in the short term but not sustainable regularly, forcing utilities to proactively find new outlets for surpluses outside the normal distribution range—selling into emerging energy imbalance mar- kets, offering consumers time-of-use rates to encourage consumption dur- ing plentiful sunlight hours, and/or boosting energy storage capacity while persistently enhancing power plant flexibility to more quickly follow sys- tem operator instructions to change generation output levels. This challenge is most acute in— but hardly unique to—California, the harvest of the state’s ambitious re- newable goals. The state has more than half of the United States’s solar installation, but the “duck” is occur- ring in an increasing number of states. Little wonder: A new solar installation in the United States goes live every two-and-a-half minutes, and renew- ables accounted for 87% of new U.S. electricity generation capacity in Q1 of 2016, led by solar and wind. In Ha- waii, where renewable penetration is even higher—“behind-the-meter” solar PV systems are now greater than the state’s largest central station gen- erating unit—the local duck curve is so extreme it is known as the Nessie curve, after the Loch Ness monster. The challenge is getting more in- tense. When California’s Independent System Operator (CAISO) first identi- fied the pattern in 2013, it projected trend lines that have already been well exceeded, with net load troughs deeper than expected and steeper demand ramp-up curves. Drivers propelling this seem set to continue. Unwavering state policies call for 50% of retail electricity to come from renewables by 2030, a target made easier as solar costs continue to plunge. Integrating these so-called dis- tributed energy resources (DERs)— renewables, but also smart inverters, storage devices, etc.—into one cen- trally coordinated network offers more than just sig- nificant environmental benefits. Properly inte- grated, they can be net- work stabilizing, enabling a more secure and reli- able grid; supporting the wholesale system; and providing operating re- serves, fast demand re- sponse capabilities, and frequency regulation. Beyond the Traditional According to Arthur “Bud” Vos of Enbala Power Networks, “Forward- thinking electric companies regard DERs as opportunities to move be- yond traditional regulation and to- ward new revenue streams, based on performance-based incentives and service fees, while deferring capital investments.” In fact, the lion’s share of California’s solar capacity was in- stalled by utilities. This is just one dimension of the much broader transformation the util- ities industry is undergoing, the most significant in a century, from central- ized, vertically integrated providers of one-way dispatched power to a far more complex function as a systems integrator into a far smarter grid, re- quiring a whole new business model. Pedro Pizarro, CEO of Edison In- ternational, envisions a “DER-filled future” with the “proverbial center of gravity shifting to the distribution side” requiring nothing less than the industry’s “self-reinvention.” It’s an assessment gaining currency in the industry. In Utility Dive’s an- nual survey of 400 electric utility ex- ecutives, 56% said the future prevail- ing business model would be as an en- ergy services or smart integrator util- ity, compared with 18% who expected to still be in a traditional, vertically integrated, regulated utility model. Admittedly this is 20 years out, but the executives also identified DERs as their top business opportun- ity. But a successful transition to this new model requires a cultural shift for these firms, becoming more solu- tions oriented and customer centric, others point out. It also requires that the industry do a better job communi- cating to the wider public the chang- ing nature of the grid and the value of its electrical services and their fair pricing. Take, for example, the notion of grid defection. For a home with any kind of heavy load—say, an HVAC system—the grid is still needed for ini- tial start-up power before a solar array could take over. That’s in addition to the grid’s function managing power backflows and voltage fluctuations. Still, it remains an open debate how grid services should be valued and how to maximize the value of pri- vately invested distributed resources —some of which are not visible, much less controlled by utilities—and more fundamentally how to price electricity, noted Adam Cooper, director of re- search and strategic alliances at the Institute of Electric Innovation. “People are being cautious because we have learned how to price elec- tricity over 100 years. There are cer- tain models and structures that are in place and there is a general question- ing of ‘Is this the right way to do it— and if not, what is, and then what are the next ways to do it?’—and there are a lot of different opinions out there,” he explained. It’s generally understood that the
COVER STORY /
California state policies
call for 50% of retail
electricity to come from
renewables by 2030.